Essity (essityb.ST): Downgrade to Sell on earnings risk and separation uncertainty

研报英文原文证据摘录

Essity (essityb.ST): Downgrade to Sell on earnings risk and separation uncertainty

Goldman Sachs Essity (ESSITYb.ST)

Our illustrative analysis of a Consumer Tissue disposal suggests limited scope for further re-rating from

current levels, with the core business already trading at close to 9x FY27e EV/EBITDA on our estimates

despite delivering 4% EBITDA growth (FY25-28 CAGR) versus the GS Consumer Staples sector at 10x for

6% growth. That said, we acknowledge the considerable uncertainty surrounding any potential transaction,

including valuation, dis-synergies and achievable cost savings, and we will look for greater clarity on these

factors as the strategic review progresses.

Exhibit 13: Our analysis suggests limited share price upside, even under our Consumer Tissue separation scenario

Illustrative separation analysis for the Consumer Tissue business, assuming c.SEK 2bn of stranded salesforce expenses and an 8x deal

multiple

Illustrative (within comparable transaction range) analysis of

Legend Units FY27e Comments

Consumer Tissue disposal

A Group EBITA SEKm 19,725 From the current GS financial model

B minus Consumer Tissue SEKm (4,205) From the current GS financial model

C minus shared salesforce SEKm (2,385) Based on the estimation below (see T)

D add-back cost savings SEKm 1,000 In-line with prior cost savings programs

E Group EBITA ex. Consumer Tissue SEKm 14,135 A + B + C + D = F

F minus amortization SEKm (4) Based on H1 26 financial disclosures

G Group EBIT ex. Consumer Tissue SEKm 14,131 G = E + F

H Net finance income SEKm 864 Assuming 3% interest on net cash (see Y)

I Group PBT ex. Consumer Tissue SEKm 14,995 I = G + H

J Income taxes SEKm (3,830) Assuming an unchanged 25.5% effective tax rate

K Minorities SEKm (74) Assuming unchanged level of minority interests